On December 31, Daniel McGrath completed the first year of operations for his new business. The following data are available from the company€™s accounting records:

1. How much net income (loss) should Daniel report for the year ended December 31 according to?
(a) cash-basis accounting and
(b) accrual-basis accounting?
2. Which basis of accounting provides the better measure of operating results forDaniel?

Sales to customers Collections from customers Interest earned and received on S265,000 185,000 Cost of goods sold Amount paid to suppliers for materials Wages paid to employees S123,000 104,500 71,000 1,100 W owed to employees at savings accounts Amount paid on January 1 for one and one-half years' rent Utility bill owed: to be paid next month year-end Interest due at 12/31 on a loan to be paid the middle of next year 18,000 1,350 950